Madtack Company uses a job-order costing system and started the month of March w

Question

 Madtack Company uses a job-order costing system and started the month of March with only one job in process (Job #359). This job had $5,000 of total cost assigned to it at the beginning of March. Madtack applies overhead to jobs at a rate of 175% of direct labor cost. During March, Madtack assigned production costs as follows to the jobs worked on during the month:                               Job #359      Job #360      Job #361 direct materials ..........   $1,000         $5,000       $3,000 direct labor ..............    2,000          3,000        2,000  During March, Madtack completed and sold Job #360. Job #361 was also completed but was not sold by the end of March. Job #359 was not completed by the end of March. Madtack Company had total actual overhead cost of $10,700 for the month of March.   Calculate the cost of goods sold reported by Madtack for March after the overhead variance has been closed.

Explanation / Answer

Job Cost sheet Job 359 Job 360 Job 361 Total Beginning Cost of WIP 5000 5000 Direct Material 1000 5000 3000 9000 Direct Labour 2000 3000 2000 7000 Oh applied (175% of DLC) 3500 5250 3500 12250 Total cost of Jobs 11500 13250 8500 33250 Status WIP Sold FG Under/Over applied Overheads Actual Overheads incurred 10700 Less: Overheads applied 12250 Over-applied Overheads 1550 Cost of Good sold: Cost of job 360 sold 13250 Less: Over-applied Overheads 1550 Adjusted Cost of Good ssold 11700

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